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Last chance for real tax reform

The same special interests that have bought the Legislature's protection from tax reform have made some new friends in the capital, and guess who comes out the loser again. When a committee of the Florida Taxation and Budget Reform Commission chose Monday to spare accountants and architects at the cost of taxing the average Joe, it was repeating some of Florida's worst political history.

Two decades ago, lawmakers faced a similar choice. First they embraced the fair, enlightened approach by making the users of services such as lawyers and accountants and advertisers and real estate agents pay the same sales tax as those who buy clothes, tools and other goods. Then the special interests went to work. Prodded by Republican Gov. Bob Martinez, who did not have enough backbone to withstand considerable political pressure, the Legislature reinstated the very exemptions it had lifted and raised the state sales tax by a penny. In 1987, Florida went from a leader in embracing a fairer, broader tax system to a backward tax policy that is regressive and far too narrow for a state with global aspirations.

Things haven't gotten any better. At the Taxation and Budget Reform Commission panel on Monday, it was back the future. Realtors, lawyers and other professionals paraded to the microphone claiming their businesses would be bankrupted by the same 6 percent sales tax that applies to other goods and some services. The panel's chairwoman, Gulf Power CEO Susan Story, proclaimed herself "scared" of the impact. Another member argued businesses are already overtaxed, even though the Tax Foundation ranks Florida as the fifth best "business tax climate" in the nation.

In the end, the valiant attempt by former Senate President John McKay to prod the Legislature into building a sales tax that is broader and fairer collapsed in the face of those with more political pull. Rather than replace school property taxes with $8-billion worth of sales tax exemptions and exclusions, the panel offered a seventh statewide penny on the sales tax. The Legislature could make up the rest through removing some exemptions, but not on professional services, and by counting new revenues or cutting the state budget.

This is, at best, a half-measure. The worst part of Florida's tax system is that it taxes the poorest 20 percent at nearly five times the rate of the richest 1 percent, ranking it the second most regressive in the nation. Given that the state is not about to adopt an income tax, the only viable alternative is to apply the sales tax as broadly as possible. That way, at least, all parts of the economy pay a share.

Such attempts have gone nowhere in a Legislature whose members are more apt to vote the interests of their campaign contributors than their constituents. But the Florida Taxation and Budget Reform Commission is supposed to be different. Its members are not elected, and it is created by a constitutional provision aimed at representing the broader public interest. Unfortunately, Monday's panel discussion looked like just another legislative committee meeting where the lobbyists win and the public loses.

The full commission still has a chance to redeem itself. The constitutional amendment that gives a pass to the powerful was adopted by a narrow 6-5 vote, and the issue deserves a hearing before the full 25-member commission. If commission chairman Allan Bense intends for his group to deal with the weighty issues, he should let this one be heard. With barely two months remaining before the commission must submit items for the November ballot, the sales tax expansion is the most substantive reform left on its agenda.

Florida is stuck with a tax system designed mostly in the 1940s that has not aged well as the state's economy and population have blossomed. Yet those who enjoy the exemptions are not about to give them up without a fight. The Florida Taxation and Budget Reform Commission meets only once every two decades and is supposed to rise above it all. It is supposed to see through the usual scare tactics and consider the interests of all taxpayers. Proposing an extra penny of sales tax to help reduce property taxes is not reform. It is a sellout to the powerful, and the full commission has one last opportunity to look toward the future instead of back to 1987.

Last chance for real tax reform 02/26/08 [Last modified: Thursday, October 28, 2010 8:58am]
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